CFTC obtains Court order for $3.6M fine on Berkley Capital Management
The Illinois Northern District Court has granted a motion by the Commodity Futures Trading Commission (CFTC) for default judgments in a binary options fraud case.
On August 29, 2022, the Honorable Robert M. Dow, Jr granted the motion by the CFTC for final default judgment against defendants William Thomas Caniff, Berkley Capital Management, LLC BBOT1, and Berkley II, LP126 is granted.
Let’s recall that, on May 1, 2019, the CFTC filed its complaint against William Thomas Caniff, Arie Bos, Berkley Capital Management, LLC, BBOT 1, LP, and Berkley II, LP. The Complaint charged the Defendants with fraud in connection with a scheme whereby they are alleged to have fraudulently solicited and accepted at least $4.8 million from at least 62 commodity pool participants for the purpose of trading binary options in pool accounts to be managed by BCM.
Caniff is alleged to have lied on his account application at the binary options trading firm, the North American Derivatives Exchange, Inc. (“NADEX”), to conceal an extensive criminal background. Caniff used only a small portion of participants’ funds to trade binary options through this NADEX account and sent Bos fabricated statements reflecting exaggerated reports of profits made while trading.
The CFTC also alleges that Bos ignored numerous red flags and recklessly accepted Caniff’s reports of profitable trading without reasonably verifying the results and then used those results to both solicit participants with claims of past profitable trading and to generate false statements that he sent to them showing grossly-inflated profits.
Caniff is alleged to have misappropriated a substantial portion of the participants’ funds, paying Bos and himself between $1.1 million to $1.2 million each as “fees” based on false profits. The Complaint also alleges that Caniff misappropriated funds to pay some participants a total of $2.3 million in a manner akin to a Ponzi scheme, leaving an investor shortfall of approximately $2.5 million.
According to the default judgment, seen by FX News Group, the default defendants must pay, jointly and severally, restitution in the amount of $2,598,632.
Also, the default defendants will have to pay, jointly and severally, a civil monetary penalty in the amount of $3,600,000.